Global Forces and the European Brewing Industry

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Transcript of Global Forces and the European Brewing Industry

Global Forces and the European Brewing IndustryPestel AnalysisSubstitutesPorter's Five ForcesConclusionImpact on the companiesStrengths and weaknesses of each companyPoliticalIncreasing awareness of the effect of alcohol on health and fitness.EconomicalIncreasing competitive environmentBrewers relying on super brandsDecline of beer consumption in EuropeConsumption in decline in Germany and UK but burgeonning in China or Brazil.Supermarkets dominated off-trade marketsBrewers' main purchasing costs : packaging, raw materials and energy.European packaging industry dominated by international companies.Rise in packaging costsVolume of sales falling / value of sales increasingMergers and strategic alliancesSmaller companies are being snapped up by large international ones.Fosters withdrawalSouth African brewer buying Miller and Pilsner Urquell.Socio-culturalEurope turning off beerWines more popularAwareness on the effect of alcoholNegative vision of binge-drinking in the UKDecline of consumption on-trade in bars and restaurants and increase of off-trade.Swift of consumption.LegalTough legislations against drunken driving.Licensing agreements to control the market.Potential EntrantsChina, Brazil, South AfricaSuppliersCrown : can-makersOwens-Illinois : glass bottlesWinesFruit-flavoured beersBuyersOn-trade : bars, restaurantsOff-tradeSupermarketsInBevAnheuser-BuschSABMillerInternational companies dominate the marketCompetitive impasseMature marketSaturated market with big companies that leave no room for small emerging ones.FragmentedSystemSpecialisedSystemCompetitiveImpasseSystem of volumeSize of the competitive advantageDifferentiation forcesAbility to innovateTimeIntroductionGrowthMaturityDecline78% of its sales in Europe BUT decline of the consumption in this areaLegislation in Europe = decrease in salesWine becoming more popularImpact : They will try to find new opportunities (Asia, Pacific)50% of its sales in EuropeSame impacts.Same impactsBad image : focused on the UK where binge-drinking is highly despised.BUT : Russie and China perspectives.Avoid the problems of the EU market because they have market shares in ChinaKeep their strategy thanks to acquisition.StrengthsWeaknessesTop brands : Heineken and Amstel

Family company : stability

Locally acquired companies5% of sales in Asia-PacificStrengthsWeaknesses Fruit flavoured beers50% of sales overseasCentralised productionInnovation and branding at the core of strategyMedium-sized firm

Turnover : One twelfth of the size of Heineken'sStrengthsWeaknessesStrengthsWeaknessesLimited focus (Europe)